The Marginal Cost of Pollution Is MC = 2Q, While

question 24

Essay

The marginal cost of pollution is MC = 2Q, while the marginal abatement cost is MAC = 12 - Q. Government regulators incorrectly estimate the marginal abatement cost at MAC_E = 9 - Q. The level of pollution, measured in tons of glop, is Q.
a. Solve for the socially optimal level of pollution by using MAC.
b. Based on the government's incorrect estimate of marginal abatement costs, what does the government think is the socially optimal level of pollution?
c. If the government uses a quota to intervene in the market, how much pollution will be omitted?
d. If the government taxes each ton of glop, how much pollution will be omitted?
e. Does quantity restriction or the price-based intervention get us closer to the socially optimal output level?

---

Definitions:

Accountability

involves the obligation of an individual or organization to account for its activities, accept responsibility for them, and disclose the results in a transparent manner.

Assigned Tasks

Assigned tasks are specific duties or responsibilities allocated to individuals or teams as part of their job or project roles.

Delegation

The assignment of responsibility or authority from one person to another for specific tasks or activities.

Assignment of Responsibilities

The process of distributing tasks and duties among members of a group or an organization.